McDonalds Is full of Pooh Pooh

[rsmith6621]

Saying they cant raise the price of their product to pay a living wage to their overworked employees who have made them what they are today.

HELL in the last year they have raised the price of their SHIT at least 25%. The price of a biscuit/sausage/egg/cheese sandwich has gone from $1.99 to 2.99-$3.59 ala-carte.

When you ask a manger why such an increase, they will say the cost of fuel,the cost of their overhead and they will say PAYROLL. When asked when they last gave the store employees a raise they wont answer, so the raise must be to management.

So if they can raise it because of product related overhead then WHY IN THE HELL CANT THEY HAVE A PRICE INCREASE TO GIVE SOME DIGNITY BACK TO THE EMPLOYEES.

WHY?...CAUSE THEY DONT WANT TO. EMPLOYEES ARE A COMMODITY LIKE EGGS.CRACK THEM,EAT THEM AND THEN SHIT THEM AWAY.

[brewens]

1. Of course the same people will say a business will always raise prices to pass

on the cost of a tax increase to it's customers. Of course that's not always possible. Sure, they would like to but a lot of factors control if they can or not. If you raise prices, demand might drop and revenue along with it. If that happens you might have to cut production, cut back on bulk raw materials and see those costs increase. That price raise may end up losing you money.

Sometimes it's more economical for a business to just eat the cost. Their management and stockholders maybe make a little less money, but they still make a lot of money.

[gopiscrap]

2. All businesses are full of shit

they're out for themselves and will fuck over their employees in heartbeat!

[dreamnightwind]

3. Here's an interesting article on this

from Forbes:
http://www.forbes.com/sites/timworstall/2013/08/02/the-real-change-in-the-cost-of-a-big-mac-if-mcdonalds-workers-were-paid-15-an-hour-nothing/

Hmm. Well, what else can we surmise about a rapacious capitalist organisation? In that ruthless pursuit of gelt and pilf for its shareholders it is going to gouge the customers for the absolute maximum that it can, yes? This is what capitalists do: we hear people complaining about that all the time as well. What limits McDonald’s ability to entirely empty our wallets every time we want a hamburger is that there are other people who will also sell us one. Wendy’s, Jack in the Box, In and Out, there’s a multiplicity of places where we can go to fur our arteries. Which leads to our conclusion on pricing in a capitalist and free market economy. The capitalists charge the absolute maximum they can get away with, that ability being limited by the competition that comes from alternative suppliers.

Thus the price is not determined by the cost of production of an item. Which means that, if we raise McDonald’s production costs by increasing the wages of the workers, the price isn’t going to change. For it’s not production costs that determine prices: it’s competition that does. Another way to put this is that McDonald’s is already charging us the absolute maximum that it can for its current level of sales. Thus it cannot raise its prices if its production costs go up.

His analysis seems over-simplistic to me, for one thing the increased income of service workers would allow them to pay more for goods, but I think he is mostly correct, companies set prices based on what the market will pay, not based on what it cost them to produce the product.

[TreasonousBastard]

4. It's simplistic, but not necessarily for the reasons you might think...

It's in Eco 101 and Marketing 101-- how pricing works.

For commodities, the market sets the price. For unique goods, the manufacturers, retailers, etc. try to set the price. Ultimately, the consumer sets the price. In economics they call it "elasticity".

Burger joints advertise partly to get people in the doors, but also to distinguish their burgers and their stores. They want you to pass Burger King and stop in at McDonald's. And it's not always about how great the food is-- sometimes they pitch you with smiling employee faces or what good stuff Ronald is doing.

If they can get you to want to go there, they don't have to worry so much about price competition.

Look at how Apple keeps the price up-- they create the demand for i-whatevers to be super cool, reliable, or in some way more desirable than the other stuff out there.

"Cost plus pricing" is the idea that you add up your costs and tack on some profit. Retailers usually start with this number, but it's merely a starting point. You'll find the real number soon enough, and the trick is often to reduce costs to meet it.

[dreamnightwind]

5. Yes, excellent points

Many factors - quality, brand identity, production cost, consumer demand, control of market niche all contribute to pricing decisions.

The main point of the Forbes article, though, one we both seem to agree with, and one that I rarely see in the media, is that "cost plus pricing" is only part of the story.

I was originally searching for the actual labor cost that goes into a Big Mac when I found the Forbes article. I saw some report recently where I think they said 28 cents of a Big Mac is its labor cost, didn't manage to verify that though and it probably isn't real important, since McDonald's is pricing their food based primarily on other factors.

What holds up Apple's prices: iCool. Sad but true.

[Silent3]

7. The Forbes argument might hold if one chain, like McDonald's alone, increased employee pay...

...but if many of its competitors also had to increase wages at the same time, either due to an increased minimum wage or a settlement with striking workers, then the equilibrium price point of their product would increase by the small, necessary amount to cover the added cost of the higher wages, without such an inescapable loss of jobs to automation.

(I just started looking through the comments to the article, and I see the author of the article ends up admitting much the same thing.)

[dreamnightwind]

9. Yes, probably a very small increase

if any, since the labor costs are a very small part of it.

I've always thought the automation argument was exaggerated. It's mostly just the corporate types trying to scare workers from demanding more money.

I'm sure there are labor/automation decisions that could be effected by higher labor costs, seems like not many such decisions would be tipped by just paying people enough to live off, plus by automating, they're taking money away from some of the people who buy fast-food, so that's a small factor in the other direction.

[dsharp88]

6. McDonalds Is full of Pooh Pooh, but enough about the ingredients in their food... n/t

[jtuck004]

8. LOL - I was just thinking, they won't like us revealing their secret recipe on the Internet. n/t

[reformist2]

10. Good point. They manage to pass along increases in the price of eggs just fine...

It puts the lie to all their bitching and moaning that they couldn't deal with a wage increase. They obviously could manage just fine, they just don't want to admit it. It's always less for everyone else, more for themselves.